So husband and I are looking to buy our first home. We’ve narrowed it down to two homes. One is within our budget (House A), one is on the tip top of our budget (House B). We’re looking to put about 5% down on both houses. Both houses are located in an area that is exploding and will gain equity. There are large companies moving to the area bringing hundreds of thousands of people to this city.
We make about $60K in income currently. Next year we will be making $90k as I will go back to work (staying home with our first child). We currently have $2,300 of recurring monthly expenses (health insurance, electricity, etc... I’ve rounded up on all expenses when working numbers bc houses are always more expensive).
House A is listed at $260k and is on 1 acre, comes with fancy appliances, pool, and lawn mower. 3 bed/2 bath. It’s only 1,700 sq feet, but needs no upgrades. Downside is the bedrooms are small. It would be a good home for about 5/6 years, but we will out grow it. It’s in a good, established neighborhood. Estimated mortgage costs (including taxes, insurance, etc.) would run about $1,900 rounding up. Based on my numbers we’d be spending roughly 38% of our income on the house and be able to save about 14% of our annual income.
House B is listed for $290k and is in THE BEST neighborhood.... I’m not kidding. This is the neighborhood to be in. It’s the cheapest house in the neighborhood, but will probably be worth double in the long run. It’s 4 bed/2 bath. 2,300 sq feet, needs no upgrades. Gorgeous house and we could easily stay in it for 10+ years. Downside is the price and no land. Estimated mortgage cost (if we offer $270k because sellers are motivated. It’s been on the market for 4+ months and relator said they’re hoping to get $280k) is about $2,200 (including taxes, pmi, etc.). Here we’d be spending roughly 45% of our income on the house and only save 7-9% of our annual income.
I know the obvious answer is to go with House A; it’s cheaper. However, we’d grow out it quickly, and the opportunity for equity gain is not there nearly as much as House B (it’s still there, but House B is in THE neighborhood- seriously. Houses are selling from between $300k-$700k in that neighborhood). It’d be a struggle for the next year, but I think it would be worth it in the long run because of the equity gain and we’d be able to stay in the house for 10+ years. Or am I just being dumb thinking that it may be financially safe and plausible? Thoughts?
Another thing is closing costs. How much can I expect to pay in closing costs?
Submitted September 15, 2018 at 02:24AM by hottotrot22 https://ift.tt/2D0uQ8F
